Refinancing can either reduce or increase the total interest you pay, depending on the new interest rate, loan balance, and repayment term. A lower rate can reduce the interest charged on the remaining balance, but starting a new longer-term mortgage may extend the period over which you pay interest. For example, refinancing a loan with 20 years remaining into a new 30-year mortgage could lower your monthly payment while potentially increasing the number of years you make payments. Refinancing costs that are added to the loan can also increase the amount on which interest is charged. Before refinancing, compare your remaining interest under the current mortgage with the projected interest under the new loan. A mortgage interest calculator can help you understand interest costs, while a refinance calculator can help compare different loan scenarios.
